Reading time: ~2 m
John Deaton, founder of CryptoLaw, criticized the SEC’s over-coverage in an article published on Fox Business. According to Deaton, Gary Gensler, chairman of the Securities and Exchange Commission, has aggressively sought to expand the agency’s powers beyond what is allowed by law.
He cited how, with the exception of congressional action, the Commodity Futures Trading Commission (CFTC), the main regulator of investments that are not considered traditional securities, has primary responsibility for regulating digital assets. This could mean that the SEC has limited jurisdiction over the cryptocurrency industry.
In 1946, the Supreme Court issued its famous ruling on the Howie criteria, in which it set out a four-part test to determine what qualifies as an investment contract.
Deaton went on to say that after Howie, Congress failed to pass any new legislation that would directly regulate cryptocurrencies. This should mean that Congress intends to make the CFTC a de facto regulator of the cryptocurrency industry.
He argues that Gary Gensler, chairman of the U.S. Securities and Exchange Commission, used this perceived lack of clarity to launch a campaign of regulation through enforcement that pushed Howie to the limit.
Ripple Trial: “There’s a Lot at Stake”
In December 2020, the Ripple case was filed by Jay Clayton on his last day as SEC chairman. The Securities and Exchange Commission has brought charges against Ripple executives for allegedly selling XRP in a way that could qualify as Howie’s security because the proceeds, according to the Securities and Exchange Commission, were used in part to support the growth of Ripple’s business. As a result, they were required to “disclose” to investors information about these sales, as a public business would do.
John Deaton previously noted on Twitter that XRP is by far the most important altcoin in the cryptocurrency market as a result of the SEC’s actions against it.
He pointed out that if Ripple Labs loses the case, it could be dangerous for all other cryptocurrencies, as the SEC could label them as “unregistered securities.”
#SEC #Ripple #Lot #Stake